Steel clash between US and China could hurt Brazil

12:00 AM (GMT -03:00) – Jul 06 2017

In the lead up to the G-20 meeting, China and the US are heading to a new clash in the global steel market that may affect Brazil, the second-largest exporter of the commodity to the US. Valor has learned the Americans threaten unilateral action to block Chinese steel imports, which the US and Europe accuse of dumping. China accepted last year lowering its output to 100 million tonnes from 150 million in response to the complaints but so far has refused to provide data on each of its mills' capacity. Brazilian officials hope both sides can avoid a high-profile confrontation that could spill over its steel exporters.

Brazil crisis may open “correction” opportunity

12:00 AM (GMT -03:00) – Jul 06 2017

The combination of a political class that clings to power and influential business leaders desperately seeking wealth with elected leaders willing to negotiate has deformed the Brazilian state's patrimonial system, says economist Eduardo Giannetti. The problem reached such a point that “it opens an opportunity for a profound correction,” he says. The changes depend on a political and economic reform that next year's presidential election “could make viable.” The economist predicts two possible scenarios for 2018: polarization or dispersion. The former will happen if former President Luiz Inácio Lula da Silva runs for office, who would certainly attract some right-wing challenger like São Paulo Mayor João Doria or controversial Federal Deputy Jair Bolsonaro. The campaign would be violent and resentful in this case. But a dispersed scenario without Mr. Lula, which Mr. Giannetti sees as best for the country, could open the gates to a flood of candidates and even an adventurer, but could also create significant advances.

Via Varejo's announcement that it reached an agreement between partners Grupo Pão de Açúcar and the Klein family, to share the losses suffered after both sides merged their respective chains of white goods and electronics, Casas Bahia and Ponto Frio, may hasten the drawn-out sale process of Via Varejo. Analysts say Via could be sold as soon as the second half, particularly since the initial public offering of rival Carrefour Brasil raises pressure on GPA to shed the unit. The new shareholders' deal also averts a potentially damaging legal fight by making both sides share equally any losses from processes whose responsible party cannot be identified. Valor has learned that Via Varejo scrutinized all liabilities in the last six months and distributed them to each party, having already set aside R$718 million to cover labor and pension debts from R$432 million a year ago.

PSDB close to leaving coalition, Senator Jereissati says

12:00 AM (GMT -03:00) – Jul 06 2017

The Brazilian Social Democracy Party (PSDB) gave an unequivocal signal on Wednesday that it is closer to disembarking from the Michel Temer government, after the party’s interim chairman Tasso Jereissati (Ceará) said that this possibility "is increasingly clear" within the PSDB. Mr. Jereissati said, however, that stance does not necessarily mean the PSDB will become opposition. “This stance is becoming increasingly clear due to the facts," said Senator Jereissati, in charge of the party since the Federal Supreme Court (STF) ordered the suspension of Senator Aécio Neves (Minas Gerais) on May 18 amid investigations of Operation Car Wash. Mr. Neves returned Wednesday to the Senate, also authorized by the STF, and has always been a supporter of an alliance with Mr. Temer.

IRB in search for strategic partner after IPO

12:00 AM (GMT -03:00) – Jul 06 2017

As it prepares to launch its initial public offering on Friday, reinsurer IRB has been negotiating a strategic partnership with a global company that operates in the reinsurance industry and has a similar model to that of IRB in Brazil, Valor has learned. The idea is for this foreign reinsurer to acquire the control of IRB after the IPO, when there will be a price reference given by the market, which tends to facilitate the transaction by the federal government, the top shareholder with a 27.4% stake. IRB draws attention mainly of reinsurers that are not yet in Brazil. In this case, the discussion would be limited to the control premium that will be paid on the stock price. Talks between IRB and this strategic investor are still at an early stage.

Prosecutor-general appointee set for Senate hearing on July 12

12:00 AM (GMT -03:00) – Jul 06 2017

The hearing and vote of Raquel Dodge for the post of prosecutor general will be carried out by the Senate’s Constitution and Justice Commission (CCJ) on Wednesday, July 12, and the floor must approve the decision the same day. The rapporteur of Ms. Dodge’s appointment, Senator Roberto Rocha (Brazilian Social Party, PSB, of Maranhão), who recommended her approval, criticized the work methods of the current Prosecutor General, Rodrigo Janot, giving indications this will be one of the topics in the Senate hearing. Mr. Rocha said he believes Ms. Dodge "prefers politics instead of punches" when answering whether she will be asked if she agrees with Mr. Janot's procedures in conducting Operation Car Wash. If her name is approved by senators, Ms. Dodge should take office in September.

Brasil Brokers expects business to pick up in second half

12:00 AM (GMT -03:00) – Jul 06 2017

Brasil Brokers, the second-largest realty chain in Brazil, is seeing the first signs that the second half could bring more deals than the first. Company president Claudio Hermolin says the country's biggest market, São Paulo, is seeing activity heat up faster than other markets. Brasil Brokers's performance already improved in the second quarter from the first and may have surpassed last year's results, he says, reckoning “the JBS crisis postponed some launches. The first and second quarter could have been much better.” While the political crisis continues and even threatens President Michel Temer, the executive believes the economy's fundamentals are stronger than a year ago.

VW raises estimates for auto market in Brazil

12:00 AM (GMT -03:00) – Jul 06 2017

Signs of recovery seen in car sales have already led Volkswagen to raise its projections for the year. "Looking at the May and June results, the expectation for 2017 rose by one to two percentage points compared to the projection we had at the beginning of the year," VW President in Brazil and South America David Powells said on Wednesday. For Mr. Powells, the new calculation indicates a market expansion of 4% to 5% compared to 2016. For 2018, the executive has an even more optimistic forecast, of 5% to 8% growth compared to this year. Mr. Powells says Volks will reduce in 2017 the idleness of its four plants based in Brazil, but the percentages are still not defined.